Indian Airlines, Jet Airways and Air Sahara, the three domestic carriers, are planning to increase their fares in an attempt to offset the effect of a 12 per cent increase in the cost of aviation turbine fuel.

Turbine fuel prices have jumped by over Rs 2,820 per kilolitre in a single month, a 12 per cent rise from Rs 22,380 per kilolitre in February to Rs 25,200 per kilolitre in March. A 10 per cent increase in fuel prices in October 2002 had prompted the three carriers to hike their fares by an equal percentage in November. None of them has, however, announced an increase in passenger fares so far.

"The hike (in fuel prices) has been substantial. If the impact is significant, a fare hike is possible," said U K Bose, chief executive, Air Sahara. Senior Indian Airlines executives, too, said fuel prices could not be de-linked from passenger fares.

Globally too, aviation turbine fuel prices have shot up by 15 per cent between January and March 2003.

Senior Indian Airlines officials said the latest increase in fuel prices would add Rs 15 crore to its fuel bill in this financial year. If the current prices continue through the next financial year, there could be a Rs 100 crore (Rs 1 billion) jump in next year's bill as well. For the airlines, the estimated fuel bill for 2002-03, taking into account the hike, is Rs 1,315 crore (Rs 13.15 billion). "A 1 per cent increase in fuel prices adds Rs 13 crore a year to Indian Airlines' cost of operations," officials said.

There has been a 52.7 per cent increase in domestic aviation turbine fuel prices in the last 12 months.

"Fuel costs make up 30 per cent of the operational costs of domestic carriers. We have seen a concomitant hike in fares with each hike in fuel prices," said an aviation industry expert.